Road construction takes place near the IL&FS building in Mumbai. (Photographer: Abhijit Bhatlekar/Bloomberg News)

RBI Cancels Meeting With IL&FS Shareholders

The Reserve Bank of India has cancelled the Friday’s meeting with the shareholders of debt-laden Infrastructure Leasing and Finance Services, according to banking sources.

The apex bank had earlier called a meeting with key shareholders of IL&FS, including Life Insurance Corporation of India and State Bank of India, after the company and its subsidiaries defaulted on repayments of various debt instruments.

As a regulator, they want to know what is the course of action and what's the road map that the firm is taking, a source said.

RBI wants details of the plan for future or corrective action which are to be taken, another source said.

The next date for meeting has not been decided yet, the source said.

IL&FS's annual general meeting is scheduled for Sept. 29 in Mumbai.

LIC and Orix Corporation of Japan are the largest shareholders of IL&FS with 25.34 and 23.54 percent stake, respectively, while Abu Dhabi Investment Authority, HDFC, Central Bank of India and SBI hold 12.56 percent, 9.02 percent, 7.67 percent and 6.42 percent, respectively.

The IL&FS group is facing a serious liquidity crisis and has defaulted on interest payments since Aug. 27. It has over Rs 91,000 crore in debt.

Also read: Shadow Banker in India Misses Three Debt Payments Due Friday

The company needs an immediate capital infusion of Rs 3,000 crore and is planning a Rs 4,500-crore rights issue.

At a meeting held earlier this month, the key shareholders of the debt-ridden company, including LIC, SBI and HDFC, had kept a pre-condition for it to raise funds through its assets or non-core businesses, before any additional money could be pumped in.

There have been reports that IL&FS has even put on the block its headquarters in Mumbai for around Rs 1,300 crore.

On Sept. 4, it came to light that IL&FS had defaulted on a short-term loan of Rs 1,000 crore from SIDBI, while its subsidiary has also defaulted Rs 500 crore dues to the development finance institution.

On Monday, IL&FS Financial Services also defaulted on repayment of commercial papers due that day.